from the you're-welcome dept

Back in February you might recall that a little something called competition forced Verizon Wireless to bring back unlimited data plans it had spent the last few years insisting nobody really wanted. But the plans nobody wanted or needed wound up being so immensely popular, they caused some very modest slowdowns on the Verizon network. As a result, Verizon announced last August that it was getting rid of its truly unlimited plan, and replacing it with a series of even worse "unlimited" plans that throttled every video touching the Verizon network. For good measure, Verizon proceeded to ban 4K video streaming entirely.

Fast forward a few months, and Verizon has now introduced a new "solution" to the company's own caveats. Starting on November 3, Verizon will be graciously allowing you to pay them an additional $10 per month to lift these arbitrary and artificial restrictions:

"The company said on Wednesday that it would offer the option for consumers to stream 4K quality video -- if they're willing to pay $10 extra a month. The option becomes available on Nov. 3.

The nation's largest wireless carrier by customers walked back its move from two months ago, when it introduced several new variants of its unlimited data offering -- but restricted video to only 720p quality. The cheapest version of the plan reduced video down to DVD quality. The carrier faced backlash from some consumers who complained about the quality cap.

Charging you more money to obtain the truly unlimited connection you used to enjoy has become pretty standard procedure. In 2016, Sprint began throttling video, games and music unless users paid them an additional fee. The vagueness of our existing net neutrality rules opened the door to this kind of behavior, and once the FCC belatedly began realizing these kinds of arbitrary limitations could be used anti-competitively late last year, Trump and FCC boss Ajit Pai had arrived on the scene, eager to gut net neutrality rules entirely.

The problem is that once you open the door to carriers building arbitrary restrictions as to what you can do on the network -- and charging you arbitrary fees to get around them -- it will never stop. Investors demand their improved quarterly returns, and the pressure will be unyielding to use these kinds of arbitrary restrictions to nickel and dime consumers in perpetuity. And with the looming Sprint T-Mobile merger reducing sector competition, and the Trump administration acting as little more than a mindless rubber stamp for the interests of the sector's biggest carriers, there's not going to be a whole lot in place to stop it.

from the limited-unlimited dept

When last we checked in with Verizon Wireless, it was taking heat for kicking at least 8,500 wireless customers off of its network without much warning. The short version: Verizon created a program aimed at shoring up connectivity to rural areas, but after hyping the program and promising rural users access to unlimited data, Verizon realized the roaming costs were higher than initially projected, resulting in them quickly pulling the plug. In a notice to customers Verizon justifies the purging of these mostly-rural users by insisting they're using a "substantial" amount of data:

"During a recent review of customer accounts, we discovered you are using a significant amount of data while roaming off the Verizon Wireless network. While we appreciate you choosing Verizon, after October 17, 2017, we will no longer offer service for the numbers listed above since your primary place of use is outside the Verizon service area."

There's several problems here. One, Verizon's apparent inability to understand what "unlimited" means is a decade and numerous lawsuits old, yet clearly the company hasn't learned much. Two, nowhere is the company telling these users what a "substantial" amount of data is, leaving them uncertain as to what they were supposed to do. And three, many of these impacted customers say their usage is absolutely nowhere near excessive, and in some instances amounted to little more than a few gigabytes per month:

"My family has three lines, and we had a 6GB plan," Dedmon, who lives in Machiasport, told Ars. "We frequently either bumped it or had to purchase 1GB extra for $15." Dedmon provided us with screenshots of her data usage that back this up.

The Dedmon family's data use shows they were going through about 2GB or a little more per person each month. But the disconnection notice from Verizon told Dedmon that her family was "using a significant amount of data while roaming off the Verizon Wireless network."

So Verizon apparently thought it was a good idea to sell limited "unlimited" plans, then kick many of these users off the network for bogus reasons. But problems began to emerge when Verizon simply refused to state how much usage was too much. Additional problems surfaced when law enforcement officials began to state that the sudden disconnections have impacted them too, reducing their ability to protect the public. Facing the added backlash from law enforcement, Verizon was forced to issue a statement saying they'd be giving many of these users an additional few months to get the hell out of dodge:

"We recently notified approximately 8,500 Verizon customers that we would no longer offer service to them because our costs when they roam on other wireless networks exceeds the amount they pay us every month. Since that notification, we have become aware of a very small number of affected customers who may be using their personal phones in their roles as first responders and another small group who may not have another option for wireless service.

After listening to these folks, we are committed to resolving these issues in the best interest of the customers and their communities. We’re committed to ensuring first responders in these areas keep their Verizon service.

If you’ve received a letter in the past two weeks, we’re giving you more time to switch providers - you now have until December 1, 2017. If there is no alternative provider in your area, you can switch to the S (2 GB), M (4 GB), 5 GB single line or L (8 GB) Verizon plan but you must do so by December 1.

While that's nice of Verizon and all, nothing in Verizon's statement explains why it's falsely claiming that many of these users were consuming excessive data when they weren't. The statement itself also goes well out of its way to downplay a problem that's impacting around 20,000 lines belonging to around 8,500 users -- so far. Again, if companies don't want customers "abusing" unlimited data plans, there's quite a simple solution: stop using the word unlimited. And again, Verizon's been facing lawsuits and investigations for its inability to use the dictionary correctly for more than a decade.

But there's another problem bubbling just under the surface of this mess. Verizon has spent years justifying its failure to upgrade its fixed-line networks (in many instances after getting numerous tax breaks or subsidies to do so) by claiming wireless broadband was going to be "good enough" for these users. And in the wake of natural disasters like Hurricane Sandy, Verizon simply refused to repair destroyed fixed-line infrastructure, insisting that wireless was "good enough." Yet here we are, and it's abundantly clear that good enough -- simply isn't.

from the invisible-barriers dept

Over the last few years, you may have noticed that Verizon is attempting a pivot from stodgy old telco to sexy new advertising juggernaut. Part of that effort has involved refusing to upgrade its lagging DSL infrastructure in countless towns and cities as it shifts its focus toward wireless and using its AOL and Yahoo acquisitions to sling videos and advertisements at Millennials. To justify its failure to upgrade its fixed-line network during this period (something it's being sued for by cities like New York), Verizon has long proclaimed that wireless is a "good enough" replacement for fixed-line alternatives.

But the company is now inadvertently highlighting just how not-ready for prime time wireless connections truly are. Verizon has been taking heat over the last few weeks for kicking thousands of customers off of its wireless network in more rural areas. Why? The company insists these customers (at last count 8,500 customers utilizing 19,000 lines across 13 states) are being kicked off the Verizon wireless network for using a "substantial" amount of data. But Verizon is refusing to tell these users what "substantial" actually means, after marketing "unlimited" data plans to these users for much of the year:

Verizon said in June that it was only disconnecting "a small group of customers" who were "using vast amounts of data—some as much as a terabyte or more a month—outside of our network footprint." But one customer, who contacted Ars this week about being disconnected, said her family never used more than 50GB of data across four lines despite having an "unlimited" data plan.

"Now we are left with very few choices, none of them with good service," the customer told us. "I guess small-town America means nothing to these people. It's OK—though I live in a small town, I know a lot of people, and I'm telling every one of them to steer clear of Verizon."

The problems here are multi-faceted. Three years ago, Verizon Wireless launched something called its LTE in rural America program (LTEiRA). Under this program, Verizon partnered with rural carriers to help extend the reach of their networks by letting them lease access to Verizon’s 700MHz Upper C Block spectrum. Several of the companies that worked with Verizon on this program state the company hyped the program, hired companies to help extend the reach of rural networks, then began marketing unlimited data plans to customers in many of these rural areas.

“It appears that Verizon induced these companies to build out in the rural areas around the country and then significantly promoted it by saying that they’re covering the rural areas, when it fact now, after putting those ads out, they’re now not covering the rural areas — in fact, they’re cutting it back,” he says.

And without much advance notice.

“This move caught them completely by surprise and totally blindsided them as it did the customers in the region,” says Jason Sulham, speaking for Wireless Partners LLC."

Again, Verizon isn't bothering to inform these users what "substantial" usage even means, part and parcel of a sector that has long advertised wireless connections as "unlimited," then saddled users with all manner of murky restrictions (part of the reason we have net neutrality rules). Some of the impacted users are telling news outlets they used as little as three gigabytes per month, so there's every indication that Verizon Wireless isn't being honest here as it tries to portray many of these folks as unreasonable data gluttons (which is traditionally par for the course).

"Law enforcement agencies in eastern Maine are criticizing a decision by Verizon Wireless to terminate cell service due to excessive cost. Police say the company’s decision will have an adverse effect on their work, and on the ability of residents to call 911.

Verizon officials remained tight-lipped Wednesday regarding the actual number of dropped customers, which some sources say could be as high as 2,000."

Again, there's nothing particularly revelatory about the fact that delivering wireless broadband to rural markets is expensive. Wireless spectrum is costly (often impossible for smaller companies), as is access to the fiber backhaul needed to feed wireless towers. But Verizon has spent the last decade insisting that freezing its deployment of FiOS fiber connections wasn't a big deal because wireless would be "good enough" for the millions of subscribers left in a lurch. In fact, Verizon found itself repeatedly under fire after Hurricane Sandy for refusing to repair fixed line networks for just that reason.

Verizon's decision to purge thousands of users off of the network for murky reasons comes as the FCC is looking -- largely at Verizon and AT&T's behest -- to weaken the standard definition of broadband to include wireless. The goal: redefine broadband to declare an area competitive and served if wireless is present, justifying institutional apathy toward doing anything about the lack of competition in the space. Granted this effort ignores instances exactly like this one clearly demonstrating that -- even with 5G on the horizon -- wireless is not a magical broadband panacea for under-served areas.

from the competition-means-higher-prices! dept

Back in 2011 AT&T and Verizon killed off their unlimited wireless data plans, instead replacing them with usage caps and steep (up to $15 per gigabyte) over fees. And while these companies grandfathered the existing unlimited data users at the time, they've spent the lion's share of the last six years waging a not-so-subtle war on these users in an attempt to get them to switch to metered plans. This ranged from AT&T's decision to block Facetime completely for users on unlimited plans, to covertly throttling these users only after a few gigabytes of usage, then lying about it. Repeatedly.

Of course AT&T has also used vanilla rate hikes on these unlimited data plans to drive users to metered options.

In late 2015, AT&T announced a price hike for its grandfathered unlimited data users by $5 per month. Last week, AT&T confirmed it had tacked on yet another $5 increase. AT&T informed these users that they are still free to keep their unlimited data plan, but AT&T really hopes that you don't:

"If you have a legacy unlimited data plan, you can keep it; however, beginning in March 2017, it will increase by $5 per month," AT&T said. The unlimited data price had been $30 a month for seven years, until AT&T raised it to $35 in February 2016. The price increase this year will bring it up to $40. That amount is just for data: Including voice and texting, the smartphone plans cost around $90 a month."

Reports have indicated this attempt by Verizon and AT&T to annoy, cajole, and hammer grandfathered unlimited data users so they leave these plans has been hugely effective. Both companies have desperately tried to convince the public that they don't really want unlimited data anyway, with Verizon going so far last year as to hire an expert to pen a blog post claiming that the consumer desire for unlimited data was just a "gut feeling," and that it was simply technically impossible to offer simpler, easier unlimited data plans.

Even with limited spectrum, the rise of small cells, WiFi offloading, and more robust networks and intelligent network management tools means unlimited data certainly is technically possible. T-Mobile (even though its plans may technically violate net neutrality by throttling all video by default) has thrived thanks to its unlimited data plans. In fact, they've made consumer annoyance at AT&T and Verizon pricing the cornerstone of many of their media campaigns:

Unsurprisingly, both AT&T and Verizon have been losing customers hand over foot to T-Mobile. It's telling (both about these companies and the overall quality of real competition in the space) that their reaction to this competitive threat is to raise rates, whether that's AT&T's price hikes for unlimited data, or Verizon's recent decision to jack up a number of service fees. Yes, AT&T and Verizon could offer unlimited data. It's just far more profitable to have your customers so terrified of going over their monthly allotments, that they sign up for fat, pricey data plans they probably don't need in the first place.

from the bad-precedent dept

For some time now T-Mobile has been accused of violating net neutrality by exempting the nation's biggest video services from its usage caps, and throttling all video on the network by default to 1.5 Mbps or 480p. Net neutrality advocates have repeatedly warned that giving some content or companies a leg up and fiddling with service quality sets a horrible precedent, and research has shown T-Mobile's system to be unreliable and exploitable. Still, T-Mobile has so far received applause from many regulators, media outlets and customers operating under the belief consumers are getting something for free.

As such, however bad the precedent being set here, there's no real political pressure on the FCC to act since consumers are effectively applauding what many believe to be a net neutrality violation. The FCC's net neutrality rules don't specifically prohibit zero rating, something we've long argued opens the door to creative abuses of net neutrality to thunderous applause, which is effectively what's happening here. The rules do require the FCC to explore whether zero rating is anti-competitive on a "case by case" basis, but so far, outside of a few letters, the FCC doesn't seem particularly pressed to take action.

Last week, T-Mobile introduced a new wrinkle to the entire saga by unveiling a new plan named T-Mobile One. Under T-Mobile One, users get "unlimited" data (technicaly 26 GB, after which you're throttled to 128 kbps), text and voice for $70 per month. But under this new plan, users find all video services throttled by default to 1.5 Mbps or 480p. If you want to stream video at any higher rate, you'll need to pony up an additional $25 per month. Groups like the EFF were quick to argue that the new plans still violate net neutrality:

"From what we’ve read thus far, it seems like T-Mobile’s new plan to charge its customers extra to not throttle video runs directly afoul of the principle of net neutrality," said EFF senior staff technologist Jeremy Gillula.

Right, but violating net neutrality principles and net neutrality rules is not the same thing. It's generally believed the FCC didn't crack down on T-Mobile's original plans because the FCC's Open Internet Order (pdf) not only didn't ban zero rating, but it stated that some throttling is ok if it's "a choice made by the end user." Because users could opt out of T-Mobile programs Binge On and Music Freedom, T-Mobile had creatively managed to inhabit an area not really outlawed by the agency's net neutrality rules.

...Gillula argues that the throttling of all video might violate the rule, despite the option to pay for high-speed video. He pointed to a sentence later in the same paragraph that says, "if a broadband provider degraded the delivery of a particular application (e.g., a disfavored VoIP service) or class of application (e.g., all VoIP applications), it would violate the bright-line no-throttling rule."

"If you just substitute 'video' in for 'VoIP,' it's pretty clear that the FCC's intent was to prevent discriminatory throttling, even if the user could pay to avoid it," Gillula told Ars. "In other words, the FCC (and EFF) are just fine with ISPs offering different tiers of service, as long as the tiers don't discriminate against different types of content. But that's precisely what T-Mobile is doing here—discriminating against data based on its content."

Given past statements one gets the sense that the FCC isn't all too worried about the obvious, problematic impact usage caps and zero rating may have on the open Internet. But we're quickly getting to the point where the FCC needs to at least help detail where the line is drawn, one way or another. T-Mobile's experiments last week resulted in Sprint unveiling similar "unlimited" data plans of their own, which also throttle all video to 480p by default unless you pay a premium for higher resolution. But you'll note Sprint goes even further:

Unlimited Freedom utilizes optimization for streaming video, gaming and music, delivering a high-quality viewing experience for mobile devices with video streams of up to 480p resolution, gaming up to 2mbps and music streams at extreme quality of up to 500kbps.

If you'll pause with me at the very top of this long and slippery slope and look down, folks with even the faintest tea leaf reading ability should be able to envision one possible future where all broadband access is fragmented and fractured in just this fashion, users paying more or less for varying qualities of different content and services. This was, if you'll recall, the sort of thing net neutrality rules were designed to help us avoid. T-Mobile opposed Title II and real net neutrality rules for obvious reasons, and groups like the EFF (quite correctly) worry T-Mobile is now happily chipping away at the very foundation of an open internet...to thunderous public applause.

While carriers have long insisted they offer "unlimited" data, they go to great lengths to avoid offering said advertised product when the gluttonous masses inevitably come calling to partake in the all-you-can-eat buffet. Countless companies have had their wrists slapped for the failure to disclose that their "unlimited" plans are in fact quite limited. Verizon settled a lawsuit from NY's AG back in 2007 for advertising capped and throttled services as unlimited. When Verizon and AT&T later ditched all unlimited plans, they both still waged a quiet war on unlimited users, again throttling or otherwise restricting their data consumption.

In recent years T-Mobile has taken advantage of this shift and marketed itself as one of the last companies that truly embraces unlimited data. Well, sort of. If you sign up for an unlimited T-Mobile smartphone plan, T-Mobile's website will quietly inform you that by "unlimited" T-Mobile actually means 21 GB, after which (provided you're on a congested tower), you'll have your speeds "de-prioritized" for the remainder of your billing cycle. Customers that sign up for unlimited data are also greeted with this notice, usually down below the advertisement:

So under T-Mobile's "unlimited" plans, unlimited smartphone use may actually be somewhere around 21 GB, while data consumed when tethering the phone as a modem or hotspot is throttled after 7 GB of consumption. Now to be fair, those allotments are pretty generous. And as carriers are quick to argue, the fact that you can still use data beyond those limits (albeit at reduced speeds) still technically means the connection is "unlimited." But the industry's still playing it a little loose with what is a clearly-defined term (I've underlined the key synonyms above if any confused carriers are reading).

"...These violators are going out of their way with all kinds of workarounds to steal more LTE tethered data. They’re downloading apps that hide their tether usage, rooting their phones, writing code to mask their activity, etc. They are “hacking” the system to swipe high speed tethered data. These aren't naive amateurs; they are clever hackers who are willfully stealing for their own selfish gain."

According to Legere these "clever hackers" only comprise around 1/100 of a percent of the company's 59 million customers, and a few of them have been eating as much as two terabytes a month of data. So why is T-Mobile making so much noise about a small number of customers it could easily shove to metered plans privately? T-Mobile's trying to get out ahead of media criticism for imposing limits on "unlimited" data, and to avoid the FCC's net neutrality and transparency rules by clearly stating intent (even if the T-Mobile FAQ on the issue doesn't really offer technical specifics).

It should be noted that every ISP on the planet has to deal with a small subset of extremely heavy users. This is nothing new, and if T-Mobile had said nothing, people probably wouldn't have given a damn. But after insulting his userbase, Legere proceeds with false bravado to pretend that the perfectly ordinary practice of protecting the network from gluttons somehow makes T-Mobile an industry leader:

These abusers will probably try to distract everyone by waving their arms about throttling data. Make no mistake about it – this is not the same issue. Don’t be duped by their sideshow. We are going after every thief, and I am starting with the 3,000 users who know exactly what they are doing...I won't let a few thieves ruin things for anyone else. We’re going to lead from the front on this, just like we always do. Count on it!

Good job I guess?
To be clear: outside of its wishy-washy net neutrality stance I like T-Mobile, and think the company has done some great things to nudge the industry forward (like killing subsidies and reducing overseas roaming costs). I also think these allotments are more than fair for the price being paid, and T-Mobile has every right to police its network, since two terabytes of mobile consumption is gluttonous by any standard. That said, acting like it's the pinnacle of "clever hacking" and villainy to modify a device you own to get a service advertised as unlimited is a tad specious and theatrical. And Legere's decision to subsequently bicker with users on Twitter for the rest of the day wasn't the "uncarrier's" finest PR hour:

@LEVST3R as I said the abusers will try to confuse the issue and this is one of the ways..nice try

Snark, fanboys and fisticuffs aside, the core of the problem continues to be the use of the word unlimited to sell products that simply aren't. Since the first time the term was marketed it has confused the hell out of users who don't understand that in the age of finite spectrum, intelligent network management and hungry bean counters, there really is no such thing. If you're not willing to offer truly unlimited data (and frankly no spectrum-constrained wireless carrier truly is), stop advertising unlimited data, put your next-best offer clearly on the table, and stop molesting the god-damned dictionary.

from the limited-unlimited dept

In July of 2011, Verizon announced it would no longer offer its wireless users unlimited data plans, and instead began pushing more expensive and capped shared data plans (complete with shiny $15 per gigabyte overage fees!). While Verizon did grandfather existing unlimited customers, like AT&T, it immediately began waging a quiet war on these users, throttling these purportedly "unlimited" connections to try and drive these users toward pricier metered options.

In Verizon's case, the company started by throttling unlimited customers on its 3G network. When Verizon Wireless announced in 2014 it was going to start applying these "network optimization" practices to its LTE 4G network, the company received a surprise wrist slap by FCC boss Tom Wheeler, who warned the company that he saw through its use of congestion to drive revenue:

"Reasonable network management" concerns the technical management of your network; it is not a loophole designed to enhance your revenue streams. It is disturbing to me that Verizon Wireless would base its "network management" on distinctions among its customers' data plans, rather than on network architecture or technology."

"'All the kids do it' was never something that worked with me when I was growing up and it didn’t work with my kids,” Wheeler told reporters on Friday. Wheeler said that response wasn’t good enough to calm his concerns that the company was trying to milk users for more profit. "My concern in this instance is that it is moving from engineering and technological issues into business issues,” he said.

Verizon ultimately decided to scrap its plans to throttle unlimited LTE users, and the FCC proceeded to pass tougher new net neutrality rules in February of this year. AT&T, in contrast, tried to push its luck, and continued throttling unlimited users until it received a $100 million FCC fine (which AT&T is still fighting) and was socked with an FTC lawsuit for false advertising (which AT&T is also still fighting). Verizon, meanwhile, quietly continued throttling its unlimited 3G users -- until only just last week. Verizon "announced" the changes in a bit of fine print on the Verizon website:

"Beginning in 2011," it reads, "to optimize our network, we managed data connection speeds for a small subset of customers — those who are in the top 5% of data users and have 3G devices on unlimited data plans — and only in places and at times when the network was experiencing high demand. We discontinued this practice in June, 2015."

And by "optimize its network," Verizon means "optimize its revenues." In speaking to the Washington Post, Verizon claims this was just a run of the mill business decision, made because it impacted so few customers:

"We make business decisions all the time," Verizon said in a statement to the Post. "Because it was such a small subset of customers who were affected [by the 3G throttling], we made the call to discontinue even a limited approach to managing data connection speeds."

Right, well, it's only now such a small subset of customers because Verizon drove them all to metered, LTE plans already. But basically, Verizon was allowed for four years to advertise a product falsely as "unlimited," and to use network congestion as bogus justification for driving its users to more expensive plans -- with little more than a wrist slap. With the net neutrality rules now in effect (you know, the ones that were supposed to have destroyed the Internet by now) there's some basic protections in place for consumers moving forward.

But with AT&T and Verizon's history of outright fraud and misleading consumers, and network gear getting ever more sophisticated, enforcement is going to require that the FCC remain uncharacteristically tough and attentive. And that's no given; as noted recently usage caps similarly use the congestion bogeyman to drive revenue and raise consumer rates, but the FCC has remained notably mute on the subject.

from the who-are-you-and-what-have-you-done-with-my-regular-at&t? dept

This new FCC is really quite interesting. After years and years of never actually doing anything to push back against anti-consumer policies by the big telcos, in the last few months it seems like that's all the FCC does. Today's move? Proposing a $100 million fine against AT&T for its bogus practice of throttling "unlimited" customers. As you may recall, AT&T offered "unlimited" mobile data connections, but eventually killed off that offering. To avoid getting in trouble for bait and switch, AT&T grandfathered in those who previously had the unlimited plan... but then started throttling those accounts to try to pressure people into moving to a different plan. The FTC is already suing AT&T over this, and just last month we noted that AT&T had made some changes in response to FCC pressure.

However, this new move by the FCC is a big one -- saying that it thinks the company's throttling practice flat out broke the old open internet rules (the transparency part of the rules -- which the court did not throw out). AT&T, as it's doing with the FTC case, has already indicated that it's going to fight this fine, so expect years to go by before any fine is actually paid. The full FCC notice is worth a read. The key point is pretty basic: don't call it unlimited when it's very, very limited:

The imposition of set data thresholds and speed reductions is antithetical to the term
“unlimited.” AT&T was aware that its continued use of the word unlimited to describe its data plans
was likely to mislead consumers, as evidenced by the focus group studies conducted by AT&T around the
time the Company implemented its MBR [maximum bit rate] policy. Further, since its MBR policy was implemented, the
Commission and the Company itself received many complaints from AT&T unlimited data plan
customers who felt misled about the services they expected to receive when they purchased unlimited
data plans.

We find that AT&T’s use of the term “unlimited” to label plans that were, in fact, subject
to significant speed restrictions after subscribers used a specific amount of data is apparently inaccurate
and misleading to consumers. As evidenced by the many complaints we have received about the MBR
policy, consumers entered into contracts for these “unlimited” plans with the mistaken belief that they had
unlimited amounts of high speed data sufficient to use any website or application, regardless of how much
data they used in a month. We thus conclude that every time AT&T described such a plan to a customer
as “unlimited,” it misrepresented the nature of its service. It did so in every monthly billing statement for
an unlimited plan and every time a term contract for an unlimited plan was renewed. The Transparency
Rule requires accuracy in all statements regarding broadband provider’s network management practices,
performance, and commercial terms, and providers are prohibited from “making assertions about their
service that contain errors, are inconsistent with the provider’s disclosure statement, or are misleading or
deceptive.”

We further find that AT&T’s apparently misleading use of the term “unlimited” to label
its plan impeded competition because it prevented consumers from fully comparing AT&T’s plan to other
similar plans. This inured to AT&T’s benefit and to the disadvantage of its competitors. While AT&T
describes its plan as “unlimited,” its competitors describe almost identical plans as offering “unlimited
talk and text” with a set amount of LTE data. Without adequate disclosures, the average consumer
would consider these plans to be significantly different, when in fact they are not. A consumer was likely
to mistakenly assume that the AT&T “unlimited” plan offers more high-speed data than the competing
plan, thus hindering fair competition between AT&T and its competitors. Continuing to offer the plan to
renewing customers under the original “unlimited” label falsely advertised that the data plan was the same
plan customers originally bought before the MBR policy was implemented.

You can also read FCC Commissioner Ajit Pai's dissent in which he (really) quotes Kafka's The Trial and claims that the FCC is changing the rules as it goes.

A government "rule" suddenly revised, yet retroactive. Inconvenient facts ignored. A business
practice sanctioned after years of implied approval. A penalty conjured from the executioner’s
imagination. These and more Kafkaesque badges adorn this Notice of Apparent Liability (NAL), in which
the Federal Communications Commission seeks to impose a $100 million fine against AT&T for failing
to comply with the apparently opaque “transparency” rule the FCC adopted in its 2010 Net Neutrality
Order. In particular, the NAL alleges that AT&T failed to disclose that unlimited-data-plan customers
could have their data speeds reduced temporarily as part of the company’s approach to managing network
congestion.

Because the Commission simply ignores many of the disclosures AT&T made; because it refuses
to grapple with the few disclosures it does acknowledge; because it essentially rewrites the transparency
rule ex post by imposing specific requirements found nowhere in the 2010 Net Neutrality Order; because
it disregards specific language in that order and related precedents that condone AT&T’s conduct;
because the penalty assessed is drawn out of thin air; in short, because the justice dispensed here
condemns a private actor not only in innocence but also in ignorance, I dissent.

Pai points out that AT&T did put out a number of warnings that its plan might include reduced speeds... but it still called the plans unlimited.

Either way, this should keep plenty of telco lawyers employed for many years...

from the you-may-need-a-dictionary dept

Back when AT&T stopped offering unlimited wireless data, it grandfathered many of the unlimited users it had at the time. Unfortunately for those users, AT&T immediately started waging a quiet war on these customers as part of a concerted effort to drive them like cattle to more expensive plans. That included at one point blocking Facetime from working at all unless users switched to metered plans (but net neutrality is a "solution in search of a problem," am I right?) and throttling these "unlimited" LTE users after they'd consumed as little as three gigabytes of data.

Then, just about a year ago, the FCC (like it has on a number of consumer telecom issues like telco accounting fraud or municipal broadband) miraculously awoke from a deep, fifteen-year slumber and decided to do something about this kind of behavior. FCC boss Tom Wheeler started warning telcos that they can't use congestion as a bogeyman to justify cash grabs, and that network management should be used to actually manage network congestion -- not as a weapon to herd users to more expensive options. The FTC also filed suit against AT&T for false advertising over its "unlimited" claims.

"As a result of the AT&T network management process, customers on a 3G or 4G smartphone with an unlimited data plan who have exceeded 3 gigabytes of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. Customers on a 4G LTE smartphone will experience reduced speeds once their usage in a billing cycle exceeds 5 gigabytes of data. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."

As of this week, the policy now looks like this:

"As a result of AT&T’s network management process, customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle."

In other words, gone are the references to throttling unlimited LTE users just because they hit a totally arbitrary threshold, and the company is now using network management to manage the damn network, not to make an extra buck. AT&T will of course find other, clever ways to annoy these users until they switch to more expensive plans, but it's at least good to see that the network congestion bogeyman (fear the exaflood!) isn't quite as effective as it used to be when it comes to justifying high rates, misleading consumers or conning regulators.

from the well,-that-gets-interesting dept

AT&T -- a company with one of the most powerful DC lobbying operations around -- is not having a very good month. Just weeks after being fined by both the FTC and the FCC for SMS cramming, the FTC has alsofiled a lawsuit against AT&T for lying to consumers about "unlimited" data plans, and then... throttling those same plans. The issue was that, while AT&T stopped offering an unlimited data plan, it did promise to grandfather in those users, so long as they didn't change plans. However, it didn't take long for AT&T to start throttling just those users on unlimited plans in an effort to get them to switch away from an unlimited data plan. From the complaint:

In July 2011, Defendant decided to begin reducing the data speed for unlimited mobile data plan customers, a practice commonly known as “data throttling.” Under Defendant’s throttling program, if an unlimited mobile data plan customer exceeds the limit set by Defendant during a billing cycle, Defendant substantially reduces the speed at which the customer’s device receives data for the re st of that customer’s billing cycle.

In October 2011, Defendant began restricting the data speed for unlimited mobile data plan customers whose data usage exceeded thresholds imposed by Defendant. Initially, the data usage threshold at which Defendant throttled customers varied across geographic markets. The threshold was as low as 2 GB per billing cycle in dense markets like New York City and the San Francisco Bay Area.

Under the original version of Defendant’s throttling program, from October 2011 through February 2012, Defendant capped the data speed at 128 Kbps for customers who exceeded the data usage threshold. Under the revised version, starting in March 2012 and continuing to the present, Defendant caps the data speed at 256 Kbps for customers with 3G and HSPA+ devices and 512 Kbps for customers with LTE devices.

As the FTC notes, this throttling was drastic, decreasing speeds up to 90 to 95% in some cases. The complaint also notes that AT&T knew -- via internal focus group research -- that basically no one thinks a throttled connection is "unlimited."

When it implemented its throttling program, Defendant possessed internal focus group research indicating that its throttling program was inconsistent with consumer understanding of an “unlimited” data plan. The researchers concluded that, “[a]s we’d expect, the reaction to [a proposed da ta throttling program] was negative; consumers felt ‘unlimited should mean unlimited[.’]” The focus group participants thought the idea was “clearly unfair.” The researchers highlighted a consumer’s comment that “[i]t seems a bit misleading to call it Unlimited.” The researchers observed that “[t]he more consumers talked about it the more they didn’t like it.” This led the researchers to advise that “[s]aying less is more, [so] don’t say too much” in marketing communications concerning such a program.

The FTC further points out that the throttling wasn't because of any network concerns, pointing out that it went into effect even when the network had "ample capacity" and its network was not congested. All in all, AT&T throttled 3.5 million different customers more than 25 million times.

It's worth pointing out that the FTC is not saying that AT&T can't throttle -- just that it can't sell a plan as unlimited and then throttle it.

“The FTC’s allegations are baseless and have nothing to do with the substance of our network management program. It’s baffling as to why the FTC would choose to take this action against a company that, like all major wireless providers, manages its network resources to provide the best possible service to all customers, and does it in a way that is fully transparent and consistent with the law and our contracts.

“We have been completely transparent with customers since the very beginning. We informed all unlimited data-plan customers via bill notices and a national press release that resulted in nearly 2,000 news stories, well before the program was implemented. In addition, this program has affected only about 3% of our customers, and before any customer is affected, they are also notified by text message.”

Yeah, but none of that changes the fact that the company sold an "unlimited" plan, and then made it very, very limited.

Of course, it's interesting to see that it's the FTC that filed this particular lawsuit. Some (mainly on the telco/anti-net neutrality side) have been trying to suggest that there's something of an ongoing turf war over regulating telcos lately between the FCC and the FTC. The earlier fine this month was done together, but this was just under the FTC's authority by itself -- though, in its press release, the FTC notes that it "worked closely on this matter with the staff" of the FCC. Just a few months ago, we know that the FCC was investigating Verizon's similar throttling plans -- under a similar theory. The FCC was concerned that Verizon's throttling was targeted based on what data plan customers were on, rather than whether or not they were heavy users on a congested network.

Furthermore, underlying all of that, there's been continuing debate over the larger "net neutrality / open internet" debate, as to whether or not the FCC should be handling it or the FTC -- with some arguing that new rules might limit one or the other's ability to step in. For the most part, those conversations have basically been some parties trying to drive a wedge between the two agencies that may not exist in reality, but it's still worth noting that the two agencies appear to be swimming in similar waters at times, but so far, they seem to be able to work together pretty well.